Nigeria’s domestic refining push faced fresh headwinds in the first quarter of 2026, as the Dangote Refinery alongside other local plants received less than half of the crude oil allocated to them under the Domestic Crude Supply Obligation (DCSO).

This is according to fresh data released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday, which showed a significant gap between crude oil allocated, volumes offered by producers, and actual deliveries to domestic refiners such as the Dangote Refinery and other local facilities.

According to the commission, a total of 61.9 million barrels of crude oil was allocated to domestic refineries in the first quarter of the year. However, it stated that producers collectively offered a higher volume of 68.7 million barrels within the same period, indicating that on paper, supply commitments exceeded regulatory expectations.

But despite this, actual crude delivered to local refineries stood at just 28.5 million barrels, translating to a supply performance of between 36 and 46 per cent, underscoring persistent bottlenecks in the implementation of the DCSO policy.

While producers are technically meeting or even exceeding their “offer” obligations, the inability to translate these into firm deliveries suggests deeper issues around contract terms and pricing benchmarks.

The NUPRC attributed the persistent shortfall largely to pricing disagreements between crude oil producers and domestic refiners. According to the commission, the DCSO operates under a ‘willing buyer, willing seller’ model, meaning that transactions are ultimately subject to commercial negotiations rather than strict enforcement of supply volumes.

This market-driven approach, while designed to encourage efficiency, now appears to be limiting the ability of local refineries to secure adequate crude supply, especially in a global environment where export markets may offer more attractive pricing.

“The shortfall between volumes offered and actual deliveries has been attributed primarily to pricing gaps between producers and domestic refiners. The commission emphasised that the current framework operates on a ‘willing buyer, willing seller’ basis, which continues to shape transaction outcomes,” a statement by the NUPRC spokesman, Eniola Akinkuotu, said.

Last month, the Dangote Refinery expressed concern over the unwillingness of International Oil Companies (IOCs) operating in Nigeria to sell crude to the refinery, stating that their preference for selling oil to international traders was forcing it to repurchase at higher costs, with broader implications for the economy.

President of Dangote Industries Limited (DIL), Aliko Dangote, spoke while hosting the Deputy Secretary-General of the United Nations, Amina Mohammed, at the company’s industrial complex in Ibeju-Lekki, Lagos.

The refinery, Dangote said, has continued to bridge the gap of crude supply through imports from the United States and other African oil producers despite improvement of supply through the naira-for-crude initiative.

However, a month-by-month breakdown of the figures by the NUPRC revealed a pattern of underperformance in physical deliveries, despite relatively strong supply offers by upstream operators.

In January, following consultations with industry stakeholders, the NUPRC said it directed producers to supply 22.6 million barrels to domestic refiners. According to the commission, producers surpassed this target by offering 25.3 million barrels, an increase of 11.9 per cent or 2.7 million barrels above the mandated volume. However, it stated that only 9.2 million barrels were eventually delivered.

The trend, it stressed, continued in February, when the commission allocated 20.5 million barrels for local refining. Producers fell slightly short, offering 19.8 million barrels, missing the target by about 700,000 barrels. Actual deliveries were weaker, dropping marginally to 9.1 million barrels, it stated.

In March, there was a modest improvement in supply, with deliveries rising to 10.1 million barrels. However, this still lagged significantly behind both the 18.8 million barrels allocated by the regulator and the 23.6 million barrels offered by producers, which exceeded the target by 25.5 per cent.

The data highlighted a recurring disconnect between commitments and execution, raising concerns about the effectiveness of the DCSO framework (as it currently is) in guaranteeing feedstock for Nigeria’s growing refining capacity.

The commission, however, maintained that it remains committed to achieving national energy security objectives. It stated that it would continue to refine the DCSO mechanism in line with the provisions of the Petroleum Industry Act (PIA) to improve transparency, efficiency, and compliance.

It also noted that sustaining recent gains in crude oil production remains critical to ensuring adequate volumes are available for both domestic refining and export obligations.

“Leveraging the framework of the PIA, 2021, the commission aims to sustain recent gains in crude oil production while continuously refining the DCSO methodology to enhance transparency, efficiency, ensuring that local refineries are supplied as committed,” the NUPRC added. (This Day)

Update news